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Organizations representing the nation’s retailers and restaurants warn that new rules expanding the pool of managers who must be paid overtime will harm workers. University of Memphis economist Professor John Gnuschke disagrees.

Chris Russell/The Columbus Dispatch/Associated Press Vice President Joe Biden and Jeni's Spendid Ice Cream's founder Jeni Britton Bauer order some ice cream from her shop in the North Market Wednesday, May 18, 2016 in Columbus, Ohio. More than 4 million U.S. workers will become newly eligible for overtime pay under rules issued Wednesday by the Obama administration. The rule seeks to bolster overtime protections that have been eroded in recent decades by inflation.(Photo: Chris Russell)

'The negative impact of the extensions of overtime coverage are wildly exaggerated,' Gnuschke, director of the Sparks Bureau of Business and Economic Research, said by e-mail.

'Much like the dire forecasts for minimum wage increases, the negative changes from an extension of overtime will be minimal. Ample evidence exists that workers are needed — otherwise overtime would not be an issue,' he said.

The U.S. Department of Labor on Wednesday issued regulations that, beginning Dec. 1, double the amount that salaried workers must earn to exempt them from overtime.

Currently, managers earning at least $23,660 a year, or $455 a week, aren't required to be paid overtime. The new rule raises the floor to $47,476, or $913, making those salaried workers who earn less than that automatically eligible for overtime.

Federal overtime rules require employers to pay 1 1/2 times hourly rates for time worked over 40 hours a week.

The Economic Policy Institute, a Washington think tank campaigning for higher wages, places Arkansas and Tennessee among states where the impact of the new rule will be the greatest.

The share of salaried workers who will directly benefit from the rule is an estimated 30.6 percent in Arkansas, second only to 30.7 percent in West Virginia, the institute reports. In Tennessee, the rule reaches 29.2 percent and in Mississippi, 25.3 percent of managers, according to e EPI.

However, Gnuschke said that an abundance of low-age jobs in the Mid-South doesn't mean that the extension of overtime coverage will impact many workers or employers.

'Most employers limit extra work and most employees work a standard workweek or less,' he said.

From the National Restaurant Association and the National Retail Federation to Memphis attorneys representing employers, the Obama administration's new rule isn't welcome.

They warn that while it may mean increasing pay for some to meet the new threshold, it will also mean making hourly employees of current managers and taking other steps to meet increased costs.

'More than 80 percent of restaurant owners and 97 percent of restaurant managers start their careers in nonmanagerial positions and move up with performance-based incentives,' the National Restaurant Association said in a statement. 'These regulations may mean that salaried employees, who have worked hard to get where they are, could be subject to becoming hourly employees once again.'

Several local employers contacted for this story on Thursday weren't available or referred a reporter to their national headquarters for statements.

Gnuschke said that as labor markets have tightened, low-wage salaried workers are bearing the burden of the increasing demand for overtime work.

'They are less protected from the demands of employers who find it cheaper and easier to increase their hours rather than hire new employees,' he said.

Tennessee's unemployment rate stood at 4.3 percent for April, down from 5.9 percent a year ago, the state Department of Labor and Workforce Development announced Thursday.

Still, in Memphis 'the preponderance of evidence is that many employees are working one or more jobs that are less than full time, not more than full time,' Gnuschke said.

Paying overtime for temporary extra work increases pay for those working, encourages employers to more effectively manage hours worked and has other benefits, the labor economist said.

'Through a combination of investments in capital, hiring additional employees and making cost-benefit decisions about paying overtime, employers can decide to do tasks during normal work hours or pay extra for extra hours,' he said.

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